- 4 -
As of April 15, 1997, the collateral had an aggregate market
value of approximately $750,000, which represented 120 percent of
the outstanding principal due on the promissory note.3 At the
request of CareMatrix, petitioner delivered the loan documents to
CareMatrix’s counsel. On or about May 29, 1997, CareMatrix took
possession of the loan documents and the stock certificate for
the collateral from its counsel.
The promissory note became due and payable on April 15,
2000, at which time the outstanding principal and interest due
was $746,376.52. CareMatrix subsequently demanded payment, but
petitioner refused to pay, alleging that the promissory note was
nonrecourse and that CareMatrix held the collateral. CareMatrix
made no further collection efforts.
3The parties stipulated the following with respect to the
value of the collateral as of Apr. 15, 1997: “Pursuant to the
Note, the shares pledged had an aggregate market value of 120% of
the principal borrowed - approximately $750,000.00.” As noted
above, petitioner appears to have taken a basis in the CareMatrix
and PhyMatrix stock equal to the value of the PhyMatrix and
CareMatrix stock at the time the stock was received by petitioner
during 1996. However, the record provides no evidence that the
value of the PhyMatrix stock was the same on April 15, 1997 (the
date of the loan transaction) as it was on the date that the
stock was transferred to petitioner during 1996. Because the
value of the collateral may have fluctuated from the date that
petitioner received the PhyMatrix stock until the date that
petitioner pledged the PhyMatrix stock as collateral, the
aforementioned stipulation as to the value of collateral on
Apr. 15, 1997, is insufficient to establish petitioner’s basis
in the collateral on that date. Consequently, we are unable to
determine from the record petitioner’s basis in the collateral.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011